Cancer Test Focused Guardant Health Stock Falls On FDA AdCom Update For Colorectal Test

Thursday, Guardant Health Inc GH reported fourth-quarter 2023 sales of $155.1 million, up 22% Y/Y, beating the consensus of $149.57 million.

Precision oncology revenue grew 25% to $142.2 million, driven predominantly by an increase in clinical and biopharma testing volume, which grew 29% and 16%, respectively. Development services and other revenue was $12.9 million.

The precision oncology company reported 46,400 tests to clinical customers and 9,500 tests to biopharmaceutical customers in the fourth quarter of 2023, representing increases of 29% and 16%, respectively.

The company reported adjusted EPS loss of $(0.64), beating the consensus of $(0.87). 

Guidance: Guardant Health expects full-year 2024 revenue, excluding screening, of $655 million-$670 million, compared to the consensus of $669.36 million. The company sees adjusted gross margin, excluding screening, as 60%-62%. 

William Blair notes that the major update from the recent call, aside from financial details, revolves around Shield CRC and its progress toward FDA approval. The analyst maintains the Outperform rating.

The FDA AdCom meeting, initially slated for March 28, is now expected to occur later in the second quarter. This delay is attributed to the FDA’s efforts to secure additional panel members. 

Despite this setback, the management believes that the approval will still be achieved in 2024. 

In summary, the Shield CRC journey for Guardant seems akin to navigating the complexities of a “Chutes and Ladders” game in launching a test in the market, with investors currently stuck at the initial square of the board game.

Canaccord Genuity lowered the price target for Guardant Health to $45 from $50, driven by lower base year revenue, given 2024 guidance.

The analyst notes that the Advisory Committee (AdCom) Meeting for Shield has been moved to late 2Q24, although this should not impact the FDA’s review of test.

Canaccord Genuity writes that Guardant Health’s shares remain undervalued given the company’s established therapy selection business and minimal residual disease and screening progress.

Price Action: GH shares are down 11.8% at $19.64 on the last check Friday.

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